"This is really an odd situation," said Jim Carter, general manager of Highland Publishing Company. We get most of the jobs we bid on that require a lot of press time in the Printing Department, yet profits on those jobs are never as high as they ought to be. On the other hand, we lose most of the jobs we bid on that require a lot of time in the Binding Department. I would be inclined to think that the problems with our overhead rates, but we're already computing separate overhead rates for each department. So what else could be wrong?" Highland Publishing Company is a large organization that offers a variety of printing and binding work. The Printing and Binding departments are supported by three service departments. The costs of these service departments are allocated to other departments in the order listed below. The Personnel cost is allocated based on number of employees. The custodial Services cost is allocated based on square feet of space occupied and the Maintenance cost is allocated based on machine hours. Total Labor- Square Feet of Sumber of Machine- Direct Labor Department lo Space Occupied Employees Hours HOIN Der 17,000 12,400 22 Custodial Service 1,700 3,900 Maintenance 14,200 10,100 Printing 30,000 40,500 109 144,000 13,000 Dinding 106,000 20.500 309 43,000 78,000 179,900 87,400 545 209,000 31,000 41 64 Budgeted overhead costs in each department for the current year are shown below: Dernel Custodial Services Maintenance Printing Dinding Total budgeted cout $ 350,000 65,200 93,100 412.00 161.D 5 1,001,300 Because of its simplicity, the company has always used the direct method to allocate service department costs to the two operating departments Required: 1. Using the step down method, allocate the service department costs to the consuming departments. Then compute predetermined averhead rates in the two operating departments. Use machine-hours as the allocation base in the Printing Department and direct labor hours as the allocation base in the Binding Department 2. Repeat (1) above, this time using the direct method. Again compute predetermined overhead rates in the Printing and Binding departments. 3. Assume that during the current year the company bids on a job that requires machine and labor time as follows: Direct Labas- Machine-out lleurs Printing Department 2,700 1.200 Dinding Department 700 13,300 Total hours 14,500 a. Determine the amount of overhead cast that would be assigned to the job if the company used the overhead rates developed in 11 above. Then determine the amount of overhead cost that would be assigned to the job if the company used the overhead rates developed in (2) above. Complete this question by entering your answers in the tabs below. Raqi Reg2 Reg 34 Using the step-down method, allocate the service department costs to the consuming departments. Then compute predetermined overhead rates in the two operating departments. Use machine-hours as the allocation base in the Printing Department and direct labor hours as the allocation base in the Binding Department. (Please enter allocations from a department as negative and allocations to a department as positive. The line should add across to zero. Do not round intermediate calculations. Round "Predetermined overhead rate" to 2 decimal places and rest of the answers to the nearest whole dollar amount. Show less Maintenance Personnel $ 350,000 Custodial Services $ 65.200 Printing Binding $ 412,000 $ 161.000 $ 93,100 Departmental costs before allocations Allocations Personnel Custodial service costs Maintenance cos Totalco aur alocations Predetermined overhead rate 350,000 65.200 93,100 412,000 161.000 a. Determine the amount of overhead cost that would be assigned to the job if the company used the overhead rates developed in (1) above. Then determine the amount of overhead cost that would be assigned to the job if the company used the overhead rates developed in (2) above. Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Req Repeat requirement 1 above, this time using the direct method. Again compute predetermined overhead rates in the Printing and Binding departments. (Please enter allocations from a department as negative and allocations to a department as positive. The line should add across to zero. Do not round intermediate calculations. Round "Predetermined overhead rate" to 2 decimal places and rest of the answers to the nearest whole dollar amount.) Show less A Personnel Binding Custodial Services $ 65,200 Maintenance Printing $ 93,100 $ 412,000 $ 350,000 $ 161,000 Departmental costs before allocations Allocations: Personnel costs Custodial services costs Maintenance costs Total costs after allocations Predetermined overhead rate 350,000 65,200 93,100 412,000 161,000 Machine-Hours 2,700 700 3,400 Direct Labor- Hours Printing Department 1,200 Binding Department 13,300 Total hours 14,500 a. Determine the amount of overhead cost that would be assigned to the job if the company used the overhead rates developed in (1) above. Then determine the amount of overhead cost that would be assigned to the job if the company used the overhead rates developed in (2) above. Complete this question by entering your answers in the tabs below. Reg 1 Req 2 Req Determine the amount of overhead cost that would be assigned to the job if the company used the overhead rates developed in requirement 1 above. Then determine the amount of overhead cost that would be assigned to the job if the company used the overhead rates developed in requirement 2. (Round your intermediate calculations to 2 decimal places and final answers to the nearest whole dollar amount.) Show less Total Overhead Cost Step-down method Direct method